More news about Bo & the Neil Heywood case

Bo Xilai case shines light on corruption in China

Political scandal over death of Neil Heywood draws attention to how Chinese officials make – and spend – ill-gotten fortunes.

Some spirit billions out of the country, buying up luxury villas abroad; one reportedly lavished wealth on 18 mistresses; another blew a quarter of a million dollars in a two-day gambling spree.
Chinese bureaucrats may have a grey image but their ability to amass – and spend – ill-gotten gains is eye-opening.
The extraordinary political scandal unfolding at the top of the party – the suspected murder of the Briton Neil Heywood by the wife of the top leader Bo Xilai – is unprecedented.
But the allegations of "serious disciplinary violations" by Bo himself, and of attempts by his spouse, Gu Kailai, to shift money overseas, have put an instantly recognisable and very powerful face on an endemic problem.
Corrupt officials smuggled 800bn yuan (£80bn) out of the country and around 17,000 people fled abroad between the mid-1990s and 2008, according to a report that China's central bank released last year, apparently unintentionally.
"[Bo's arrest] isn't a typical case of graft. Nevertheless, it illustrates the irrefutable truth that unchecked power leads to corruption," warned the gutsy business magazine Caixin.
Columbia University's Xiaobo Lu, an expert on official abuses of power, said the affair was a "huge challenge" for the regime. "Bo's case has revealed how closely power and money are married. In China, the corruption problem has been clearly recognised as a legitimacy-threatening problem."
The party is spinning the case as proof of its determination to keep cadres clean, with state media saying it shows that no one is above the rules and treating it as an isolated case. How many believe that is another matter. Corruption has long been a major public concern.
The party has repeatedly pledged to crack down and there is certainly no shortage of cases. Disciplinary inspection agencies handled almost 140,000 in 2010 and more than 145,000 people were punished.
Some say the massive sums now involved largely reflect the growth of the Chinese economy, while others think the problems are spreading and becoming more entrenched as political and economic power grow ever closer.
"Once people get into office they are part of the system and that makes it difficult to be clean. People who are not [clean] put pressure on you and see you as an undesirable element," said Sidney Rittenberg, who spent 35 years working alongside Chinese leaders as an ardent communist. Back in the 60s, he said, one official at his work unit was fired for merely accepting gifts of food.
Deng Xiaogang, an expert on corruption at the University of Massachusetts Boston, said: "When you are in power you don't need to do anything. People come and beg to give you favours."
No one can be sure precisely what allegations Bo may face – and given that he and his wife have vanished into custody, they have no way of challenging them.
In most cases involving very senior figures – such as the former Shanghai party secretary Chen Liangyu, now serving 18 years for corruption – there has been no suggestion they funnelled money overseas.
But last week a pointed article in the official party newspaper, the People's Daily, said corrupt officials had been secretly using children, wives, friends and even mistresses to move and hide illicitly obtained wealth overseas. Investigators are also said to believe that Gu killed Heywood because he threatened to expose her overseas investments.
Corruption concerns have increasingly focused on "naked officials" who send their spouses and children overseas – usually followed, say critics, by sizable fortunes.
Strict capital controls of $50,000 (£30,000) a year per person have done little to prevent the flow of cash.
The railway ministry's former chief engineer Zhang Shuguang, who is still under investigation, stashed $2.8bn of assets in the US and Switzerland, according to the state broadcaster. Other reports said the assets included a spacious Los Angeles property bought for $825,000 at a time when Zhang, then a much lower ranking figure, was earning just 2,200 yuan ($350) a month.
The central bank report identified eight ways that officials moved money overseas. Some simply carried suitcases of money across the border themselves or used human "mules"; others used credit cards to buy large amounts of luxury goods overseas, repaying the fees with embezzled money or bribes. In some cases, people accepted money overseas and bought property cash down, or had money put directly into overseas accounts. In more complicated schemes they set up offshore companies in places such as the British Virgin Islands, buying materials from them at an above-market rate and selling them goods at a below-market rate. The domestic company would go bankrupt and the offshore one would take it over.
Another popular avenue for money-laundering has been Macau's casinos. Because of currency controls, junket operators allow mainlanders to put down renminbi on the mainland and then advance them credit in Macau – often a figure many times the original deposit.
Winnings can be paid out in Hong Kong dollars and funnelled to another location, though sometimes officials get carried away: Ma Xiangdong, deputy mayor of Shenyang, reportedly gambled away $4.8m of embezzled funds in Macau before he was brought down. Ma was executed but such tough penalties have done little to deter cadres. "People with vested interests have no fear," said Ma's former secretary Wang Xiaofang, now a novelist who writes about official intrigues.
He Jiahong, an expert on corruption investigations at Renmin University, said greater accountability was needed. "[Anti-corruption] policies rely on severe punishment – we say we executed one and deterred 100. But this policy has not worked well. Effective investigation is better than punishment, and prevention is better than investigation."
The party has repeatedly pledged to make senior officials publicly declare their own assets and those of their relatives – but has yet to do so.
And the higher up the tree officials climb, the harder it is to challenge them. "These guys get so drunk on power they think they can get away with anything," said Rittenberg. "When the big guys are caught, usually it has something to do with their political stand. It is a political weapon and they saw Bo as a political menace."unquote

Neil Heywood 'had financial difficulties in China'

Expatriate British businessman Neil Heywood, whose suspected murder has caused political upheaval in China, left his wife and children in a financially uncertain situation in China, a family friend told Reuters.

Police suspect he was the victim of a poisoning engineered by the wife of ousted Chongqing Communist Party boss Bo XilaiPhoto: REUTERS

10:37AM BST 20 Apr 2012

Heywood's financial problems before he died prompted a former business associate to pay for his family's plane tickets to attend his London funeral.

The account marks the first time that details of Heywood's financial affairs have emerged since he died in southwest China last November. Family friends also revealed more details about the final few days leading up to his death.

Police suspect he was the victim of a poisoning engineered by the wife of ousted Chongqing Communist Party boss Bo Xilai, over a business dispute that turned personal.

Heywood left his family yuan savings equivalent to a "five-digit" sum in British pounds, the family friend said, raising the possibility that any financial dealings with Bo's wife, Gu Kailai, a former high-powered lawyer, may not have yielded him windfall profits.

Police suspect that the 41-year-old Briton had been helping Gu move money offshore in return for a commission on the transaction, sources told Reuters earlier this week.

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But if such transactions did take place, and he made personal gains from it, Heywood's widow, known to friends as Lulu but who kept her maiden name Wang, has no knowledge of them, according to the friend's account.
Wang, a native of China's northeastern city of Dalian where Bo was mayor from 1993 to 2000, and Heywood's mother, Ann, and sister in London have turned down interview requests.
"She doesn't have a lot of bank savings," the source said, requesting anonymity, adding that she had to make monthly mortgage repayments on a three-storey town house the family owns in suburban Beijing.
When Heywood bought the house a few years ago, similar homes in the gated compound sold for around 3 million yuan (£296,000), according to a local broker. Today such houses sell for about 7 million yuan following a boom in Beijing real estate.
Police believe Gu plotted to murder Heywood after he demanded a larger-than-usual cut of a big transaction and threatened to expose her financial dealings if she refused, sources with knowledge of the investigation said.
The scandal, which has brought down Bo, once considered a contender for a top national leadership post, is potentially the most divisive the Communist Party has faced in more than two decades.
It was not clear whether Heywood had other bank accounts his wife did not know about or owned assets overseas. If he did, his widow knew nothing of them, the family friend said.
Heywood, educated at Harrow School and a fluent Chinese speaker, dressed well, drove a Jaguar and had friends in Britain's aristocratic circles. He once arranged a visit to China by Winston Churchill's granddaughter.
One of Heywood's ancestors was Britain's consul general in the northern port city of Tianjin from 1929 to 1935.
His children went to an international school in Beijing where the family paid attendance fees totalling more than £31,000 a year.
But friends say his expatriate life, while comfortable, was not lavish. The chain-smoking Heywood made his living as a mostly self-employed consultant to companies, including the Beijing dealer of Aston Martin, helping them resolve disputes and assisting with due diligence.
His grey Jaguar was second-hand, with a license plate "N007W3". He requested and obtained the "007" plate from Beijing traffic authorities as he was a fan of James Bond spy movies and classic sports cars, according to the family friend.
Family friends dismissed UK media reports that Heywood may have been a British spy. The reports were based on the part-time work Heywood had done for Hakluyt, a UK-based private business consultancy founded by former British intelligence officers.
Another source close to the family scoffed at the idea, saying a real spy would hardly advertise the fact by driving around in a car with "007" plates.
"Who would be so stupid as to carve 007 on his face if he were a real spy?" this second source said.
In 2006, Heywood advised the maker of London taxi cabs, which was looking to enter the Chinese market.
"From a company viewpoint, he was rock solid – good knowledge, very intelligent, a well-organised sort of guy," said John Russell, chief executive of cab maker Manganese Bronze, which is 20 per cent owned by Chinese car maker Geely Automobile Holdings.
Heywood's widow flew to London with the couple's children – aged 7 and 11 – last December to attend a memorial service after the Aston Martin dealer in Beijing paid for their plane tickets, the family friend said.
Aston Martin Beijing declined to comment when reached by telephone.
The 41-year-old widow returned to Beijing with her children after the church service. They did not suspect then that Heywood had been murdered.
In his last days, Heywood did not appear stressed, family friends said. He attended the launch of a sports car club in Beijing on Nov. 11 and bought his daughter a birthday gift, something from Apple, the next day.
On Nov. 13, he was abruptly summoned to Chongqing, southwest China by staff of Gu, who turned 52 early that week, the sources close to the family said. He did not express any worries about the trip, they added.
Wang, Heywood's wife, lost contact with Heywood over the next three days and began to feel unsettled, the family friends said. His body was found in his room at the Nanshan Lijing Holiday Hotel on Nov. 15. Police determined he had died the day earlier from a poisoned drink, sources close to police say.
Chongqing police telephoned Wang on Nov 16 to inform her about the death, but she initially refused to believe the caller, suspecting a hoax, said sources close to the family. Th e officer suggested she check with the British Embassy in Beijing.
Disbelief soon turned to grief, and she boarded a flight bound for Chongqing on Nov 17.
After arriving in the sprawling, hilly city, she was met by a British diplomat and was told by police that Heywood had died of a heart attack due to overconsumption of alcohol.
Heywood's remains were cremated on Nov 18 in the presence of relatives and the diplomat, and his ashes flown to London.
Family members in Beijing and London, speaking on condition of anonymity, told Reuters in late March that they had requested cremation because they did not suspect foul play. That was before police told Wang, a Chinese national, in April to stop speaking to reporters about the case, family friends said.
When Chinese state media announced this month that Heywood's death had been a murder and that Gu and a household assistant were "highly suspected", the news shocked the family.
Wang was apparently unaware of her husband's business dealings with Gu and their later conflict, said a relative and a source close to the family. Heywood helped Gu's son, Bo Guagua, gain admission to Harrow. Gu is godmother to the Heywood's children.
"It's still difficult to believe Gu Kailai ordered Neil poisoned," a source close to the family said. "The two families were very close."
Asked to comment on speculation Heywood had an affair with Gu, another family friend said: "Neil adored his wife and children. Every time I called him, he would be with the kids. He spent a lot of time at home."Source: Reuters unquote